Growing fears about risk and contamination by the US sub-prime mortgage crisis saw global stock markets continue their downward spiral for the fourth day running yesterday. Claire Shoesmithreports.
The continuing malaise saw markets record their worst weekly performance in more than three months. Ireland was no exception, with the Iseq index of Irish shares finishing the week €8.6 billion lighter than it started.
Dublin dealers said it was one of the worst downward streaks since spring of last year, bringing the market back to levels not seen since early last December. And, after only two positive sessions in the last 15, dealers are not optimistic about a change of fortune.
"At the moment, there is very little on the horizon that is likely to change things," said one Dublin trader, adding that all hopes would be pinned on Ryanair and AIB beating market expectations when they report first-quarter and interim results next week.
"It's going to take something spectacular to get things going again," the trader said.
After several years of stellar returns compared to its peers, the Irish market has been an underperformer this year. However, it was not alone this week, with markets around the world enduring a rollercoaster ride.
The FTSEurofirst 300 index of top European shares ended down 0.5 per cent yesterday and is on track for its worst monthly slide since January 2003. In London, the FTSE 100 index closed down 0.6 per cent after experiencing its worst one-day slide for more than four years on Thursday. Yesterday's close was its lowest level since mid-March.
Germany's DAX fell 0.8 per cent, while in France the CAC 40 closed down 0.6 per cent.
The negative sentiment started in the US, where concerns about the sub-prime mortgage market sparked a flight from riskier assets. Since then, a series of warnings from some of Wall Street's bellwether companies, including top mortgage lender Countrywide Finance, has exacerbated the situation, which has now escalated into a sense of general negativity as far as the global economy is concerned.
Raising funds for buyouts, something that until recently took no trouble at all, is now a serious concern, and investors fear that banks may have to use their own balance sheets to fund some of the finance they have already committed to.
The negative sentiment is also playing on takeovers, with food conglomerate Cadbury Schweppes announcing yesterday it was extending the timetable for the sale of its North American drinks business due to the turbulence in debt markets.
Stocks in the US yesterday continued the downward spiral that saw more than $300 billion (€220 billion) wiped off the value of the S&P 500 on Thursday. - (Additional reporting: Reuters and the Financial Times service)
